Via eFX - Nomura FX Strategy Research discusses GBP outlook in light of this week's robust UK GDP growth data.
"Economic growth was reported at 0.4% q-o-q in Q3, better than the BoE expected at the time of its August Inflation Report but still subdued - especially when judged against the backdrop of a rapidly recovering and synchronised global economy.
Typical recoveries have lasted longer (and seen far greater expansions) than the current one, which may suggest that the cycle has longer to run and that the BoE will view its first rate hike in a decade as the start of a cycle, rather than "one and done" - a gradual and limited cycle, admittedly," Nomura argues.
Strategy-wise, Nomura prefers to trade with conviction that the BoE is on a hiking cycle, recommends maintaining long GBP Vs EUR in options, and a fresh long GBP vs AUD in spot.
